However Teva is now close to an agreement to acquire Dublin-based Allergan’s generic drugs unit for between $40 billion and $45 billion, according to reports in the Wall Street Journal.

A successful deal with Allergan would make Teva, which Reuters estimates is worth $60 billion, a much bigger player in the generic drugs sector. It would also create opportunities for significant efficiency and tax savings. Allergan has a market capitalisation of $121 billion, Reuter’s estimates, after its own buyout of Actavis for $66 billion in 2014’s largest takeover deal.

Mylan has been consistent in its refusal to entertain any offer from Mylan, with executive chairman Robert Coury accusing Teva of ‘playing games’ in the media and failing to make a firm bid.

In turn Mylan is involved in another takeover wrangle, having lodged a hostile $34 billion bid for Perrigo. Were Teva to clinch a deal with Allergan for its generic drug business and abandon its pursuit of Mylan, this would likely free the Mylan’s board to make a bolder and larger bid for Perrigo – which recently acquired GSK’s over the counter portfolio.

Updated 11.00: Teva has announced it has reached an agreement to buy Allergan Generics for $40.5bn, to create a top-10 pharma company with “a transformative generics and specialty company well positioned to win in global healthcare.”

Allergan will receive $33.75 billion in cash and shares of Teva valued today at $6.75 billion, representing an estimated under 10% ownership stake in Teva.

Prof. Yitzhak Peterburg, Chairman of the Teva Board of Directors, said, “This acquisition will result in significant and sustained value creation for our stockholders, reinforces our strategy, accelerates the fulfilment of a new business model, strongly supports top-line growth and opens a new set of possibilities for Teva. Together with Allergan Generics, Teva will have a much stronger, more efficient platform to achieve our goals – both financially and strategically – with the right platform for future organic and inorganic growth.”